Childcare

This blog was originally published by Richard Exell and Lindsay Judge on Touchstone.

Universal credit (UC) may be much-maligned but like it or not, it’s coming our way. Given this, how can it best deliver on its dual promise to make work pay and reduce poverty? The TUC and Child Poverty Action Group have been exploring this question in recent months, ably assisted by Howard Reed of Landman Economics. Here, we offer a sneak preview of our results.

"It will come as little surprise that raising a child is expensive, and that in London it has the potential to be more expensive than other parts of the country. However, new research from Child Poverty Action Group on the extra costs of children in the capital has brought up some intriguing findings that are relevant for the whole country."

The Chancellor announced a number of cuts in his Summer Budget that will impact on parents receiving tax credits or universal credit. The cuts will reduce the number of parents receiving tax credits and the level of support that is received.

In his Manifesto, Sadiq Khan boldly declared that ‘in a city as prosperous as London, there is no excuse for child poverty’. He repeated this statement almost word-for-word in A City for All Londoners, his new vision for London, published in October last year. Obviously we agree, but what action has he taken since to tackle the drivers of child poverty? And by this we mean the high housing costs, lack of affordable childcare, underemployment and low pay in the capital.

The government has been busy promoting its new tax-free childcare scheme, with its own Twitter hashtag, infographics on Flickr, and even a Facebook photo album. These proudly boast that a working family with two children can save up to £4,000 a year. The ‘top ten things to know about tax-free childcare’ announces the scheme will be simpler, fairer, and available to families earning over £52 a week and not more than £150,000 per year. However, low income families need to know that tax-free childcare offers themnothing - and could even leave them significantly worse off if they apply for it.

Four in ten Londoners in families aren’t able to afford a minimum standard of living. For lone parent families, this rises to two thirds.

These were the findings of new research as part of the Minimum Income Standards (MIS) project from Loughborough University, funded by Trust for London. This work is based on a series of focus groups where members of the public reach a consensus on what is needed, not only to ensure survival, but “in order to have the opportunities and choices necessary to participate in society.”